Background: Türkiye's car market: Ambitions on the Bosporus

There is a silver lining on the Eurasian horizon.

Background: Türkiye's car market: Ambitions on the Bosporus

There is a silver lining on the Eurasian horizon. Even if only a very narrow one, which can only be spotted with a lot of good will and excellent binoculars. The raging inflation, which made every economist's blood run cold with values ​​of up to 85 percent, has lost momentum. Nonetheless, currency devaluation continues to gallop. According to Statista, the inflation rate in March 2023 was around 50.51 percent compared to the same month last year. Still a number that would call a crisis team into action in Western Europe.

The measure of lowering interest rates, with which the Turkish President Recep Tayyip Erdogan is trying to get the sluggish economy going again, falls flat that it creates the hoped-for turnaround. After all, the Turkish lira has become stable again thanks to foreign exchange sales by the central bank. A few days before the presidential election, the omens are uncertain. It is grist to the mills of proud Turks that 177,467 pre-orders for the all-electric T10X SUV from local manufacturer Togg were received within nine days.

The concept of first establishing oneself on the home market certainly has prospects of success. With around 85 million inhabitants, Turkey has a similar number of potential customers as the Federal Republic of Germany. A business-enhancing purchasing power is also present, since the gross domestic product is only about 20 percent below the EU average. The hunger for mobility is still high in many regions. But that doesn't mean that Togg can sit in a made nest. A well-developed charging infrastructure is required for electric cars to be a sales success, and a lot of water will still flow down the Euphrates until this is sufficiently available in the vast country. After all, the number of electric cars last year increased by 132.2 percent to 14,522 compared to 2021. Comparatively modest.

So Togg makes a virtue of necessity. The Turkish manufacturer's plans are ambitious and go far beyond their own country: the Stromer is to be exported to European markets next year. Other regions such as China, the USA, Russia or South Korea are on the list. The fact that the first model is to go to Azerbaijani President Ilham Aliyev shows that those responsible for Togg are serious about their will to expand. The generous gesture is a clear sign that the company also wants to establish itself in Asian regions.

But this idea is not exclusive to the Turkish carmaker. Other manufacturers from China or Vienfast from Vietnam also want a piece of the cake with an attractive price-performance ratio. “By 2030, the Togg consortium plans to launch a total of five models, including a station wagon, a compact van and a small SUV. The high number of orders from Turkey is impressive, but it remains questionable whether the success can be repeated on an international level. Western and Asian car manufacturers - especially the Chinese - will fight hard for market share in e-mobility in the coming years," analyzes Arnd Petmecky from the management consultancy Bürgenstock Associates AG.

However, the new electromobility manufacturer does not have to manage the Turkish automotive industry miracle alone. “The automotive industry in Turkey has made significant progress over the past few decades and has become a major player on the global stage. Turkish car manufacturers such as Tofas, Oyak-Renault and Ford Otosan specialize in the production of passenger cars, commercial vehicles and buses and make a significant contribution to the Turkish economy by creating jobs and increasing exports,” says Arnd Petmecky. In 2022, automobile production increased by four percent compared to 2021. In absolute figures: around 811,000 units.

This production quality is a consequence of a fact that people in Turkey do not necessarily like to hear. The Eurasian country is still regarded as an important production location for large automobile manufacturers, almost as the "workbench of the West". It is obvious that workers and other engineers take the know-how with them. In addition, Turkey remains an important factor as a production location. According to the European automobile association ACEA, the EU imports 15.7 percent of its motor vehicles from Turkey. This makes Turkey the number one of all non-EU countries in this respect. The main buyer of Turkish automobile exports in 2022 is Germany with a volume of 4.38 billion US dollars. In the first two months of 2023, exports from the automotive industry including suppliers were worth US$ 5.5 billion. Viewed in isolation, automotive exports increased by 11 percent to $1.6 billion. So things remain exciting in the country that forms the link between two continents.

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